Regardless or whether a property will be rented out or sold, it needs to be developed. Real estate development is a complex process that can sometimes take many years to complete. Although the particular steps taken vary depending on the circumstances surrounding each property, there are three typical stages of real estate development.

A Guide to the 3 Stage of Real Estate Development

1. Pre-Development

The first stage in real estate development involves a lot of planning, researching, and obtaining permits. It’s necessary for the developer to conduct market analyses, feasibility studies, surveys, and environmental assessments. During this phase, building plans are also developed and financing is arranged. This tends to be the riskiest stage because there are so many unknown factors.

2. Construction

After building permits are obtained, the construction phase can begin. Physical building of the structure commences, and financing is drawn upon. The construction stage is also when marketing of the project begins, along with the preleasing of the building or of units in the building. This stage ends when the building is granted a certificate of occupancy.

3. Operation

The operation stage consists of more marketing and leasing—or finding a buyer, if the building will be sold. If the property won’t be sold, a holding strategy needs to be decided upon and property management acquired. A lot of the uncertainty is gone at this point, although securing renters or a buyer can still be risky. This stage ends when stabilization—meaning 90% or more of the building is occupied—occurs.

If you have other real estate development questions, call Johnson Imperial in Hastings and Kearney, NE. For five generations, they’ve been building, selling, and leasing homes and commercial buildings. Johnson Imperial also manages commercial properties and develops land. Give them a call at (402) 461-4100, or visit their website to see some of the properties they have to offer.